The lower house of the US House of Representatives on Wednesday approved a bill that would suspend the country’s national debt ceiling until 2025, removing the risk of a potential default.
The bill received 314 votes to 117 in the Republican-dominated House of Representatives, despite opposition from several conservatives who believe the initiative does not do enough to limit government spending.
The US president praised the delegates for taking “an essential step to avoid what would be the first default of the US national debt,” the White House said in a statement.
Joe Biden asked the upper house of Congress, the Senate, to approve the initiative “as soon as possible”: “I’ve made it clear that the only way forward is a bipartisan agreement that can gain bipartisan support. This deal passes the test.”
Senate Majority Leader Chuck Schumer promised to introduce the bill “as soon as possible” to “prevent default,” which the U.S. Treasury Department said could happen as early as June 5.
A default could have devastating consequences for the US and the global economy as the US is the largest economy in the world and the dollar is the reference currency.
If approved by senators, the bill will go to the White House to be signed by Joe Biden, who was involved in writing the bill, with Republican leader Kevin McCarthy in the House of Representatives.
The bill suspends the debt ceiling until 2025, i.e. after the presidential election at the end of 2024.
In return, certain spending will be capped in 2024 to keep it stable, excluding military spending, while there could be a 1% increase above inflation in 2025.
The proposal also foresees a reduction of USD 10 billion (EUR 9.35 billion) in resources earmarked for modernizing and strengthening tax services.
Kevin McCarthy’s office also said the deal would recoup “billions of dollars of unused funds” during the pandemic, without disclosing further details.
The compromise also includes changes to the terms of some Social Security benefits: It raises from 49 to 54 the age at which childless adults must work to receive food stamps, but eliminates this work requirement for veterans and the homeless.
Source: DN
